Question8

Qantas sells tickets through conventional travel agents, online intermediaries, its own telephone call center, and its own website. Typically, an airline's cost per transaction is lowest for bookings through its own website and highest for bookings through conventional travel agents. Qantas's cheapest fare, the Red e-Deal, is only available for online booking.

(a) How does technology affect an airline's ability to discriminate on price?

(b) Considering Qantas's cost of bookings and travelers' elasticity of demand, explain why the airline offers the Red e-Deal only through online booking.

(c) For flight QF401 departing Sydney on January 6, 2015 at 6 am for Melbourne, the Red e-Deal fare was A$245. For the next flight, departing at 6:30 am, the Red e-Deal fare was A$155. Explain the difference in pricing.

(d) Explain why Qantas limits the number of seats sold by the Red e-Deal.